513/2020 Andreas Ferrara and Patrick A. Testa

Religious communities are important providers of social insurance. We document the development of religious communities in the face of economic volatility associated with natural resource abundance, using variation in major oilfield discoveries in the U.S. South between 1890 and 1990. We find that oil discoveries predict large and persistent increases in church membership. Effects are increasing with oil price volatility and larger for “oil-dependent” counties with small pre-oil populations and manufacturing sectors. Consistent with social insurance, larger religious communities limit spillovers from oil shocks across sectors, smoothing unemployment, while access to credit, private insurance, and public social insurance attenuate effects.

Economic History